ECB Orphanides welcomes strong LTRO demand

AlkmanGranitsas

ATHENS (MarketWatch) -- Athanassios Orphanides, a member of the European Central Bank governing council, welcomed the strong response to the bank's three-year financing operation, saying it would boost lending in the ailing euro zone economy.

The ECB extended EUR529.5 billion in cheap, three-year loans to some 800 European banks, its second such effort to ease a liquidity crunch in the banking system.

"I want to express my satisfaction that the banks of the eurosystem, and in Cyprus, have used the opportunity of the LTRO," Orphanides, who is also governor of the Cyprus Central Bank, told journalists in Nicosia.

"Because the goal of that LTRO was to increase liquidity in the eurosystem and in that way help in the possibility of further lending inside the eurozone," he added.

The ECB doled out EUR489 billion in three-year loans in December, virtually eliminating the risk that a bank would suddenly keel over because it ran out of money. Previously the ECB only offered one-year loans.

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